The best capitals for real estate investors – and the best place will surprise you

OPENED: the best markets for investors who want to rent out houses – and our largest cities are far behind

  • Rental yields for real estate investors are highest in Hobart – at 5.13%
  • Revenues increased in all capitals except Brisbane – decreased to 4.6%
  • Renting in Sydney remains the most expensive – at an average of $ 540 a week
  • Hobart is now more expensive to rent in Melbourne – with a median of $ 450

Real estate investors in most cities have improved rental returns in the first quarter of 2019, but the best returns are increasingly being found outside the large population hubs of Sydney and Melbourne.

Rental income – the percentage of the value of the property that can be rented – improved more in Melbourne than in Sydney during the first three months of the year, which means that the two cities are 3.3%.

Both cities have improved significantly compared to a year ago, mainly due to a significant decrease in the average value of real estate.

The biggest improvement in returns in early 2019 was in Hobart, which rose to 5.13 percent.

Even though the average weekly rent for Sydney is $ 540 and Hobart is $ 450, it is the last to provide a higher return for investors due to the relatively low price of homes.

Rental yields grew in all capitals in early 2019, with the exception of Brisbane – which saw a small discount of 4.6 percent, according to data from the latest Domain Rental Report.

Apartments in Canberra, with a return of 6.14 percent, offered the best return during the March quarter - but for houses, it was Hobart who came first with a return of 5.13%

Apartments in Canberra, with a return of 6.14 percent, offered the best return during the March quarter – but for houses, it was Hobart who came first with a return of 5.13%

Housing investors in Hobart are reaping the benefits not only of the highest returns, but also of significant capital growth, according to Domain senior research analyst Nicola Powell.

Hobart has the lowest vacancy rate of all capitals with 0.3 percent – which pushes up rents as demand increases and rents rise faster than house prices.

This makes the relatively small capital of Hobart actually more expensive for tenants than Melbourne.

The average weekly rent for a house in the capital of Tasmania is $ 450, compared to the $ 440 from Melbourne, according to the Domain Rental report for the March quarter.

The Canberra apartments were the best in the March quarter – with a rental return of 6.14 percent.

Experience Canberra a development boom that pushed down unit prices.

GROSS RENTAL YIELD FOR HOUSES
Capital March 2019December 2018 Quarterly on a quarterly basis Year on year
Sydney3.32%3.29%0.7%5.3%
Melbourne3.30%3.25%1.4%7.5%
Brisbane4.61%4.62%-0.2%0.2%
Adelaide4.48%4.43%1.2%0.1%
Perth4.42%4.34%2.0%6.0%
Canberra4.39%4.33%1.4%2.3%
Darwin4.76%4.68%1.8%-4.2%
Hobart5.13%5.05%1.6%2.4%

But a large part of the apartment's inventory was aimed at the owners of the owner – which resulted in a shortage of rental accommodation that drives up the rent, Dr. said. Powell.

On a yearly basis, the improvements in rental yield in Melbourne were the largest and increased by 7.5 percent.

& # 39; If you look at the markets that have seen the most significant improvements … it is the cities that have seen the strongest price falls & said. Powell. & # 39; We are seeing prices falling faster than rents. & # 39;

GROSS RENTAL YIELD FOR UNITS
Capital March 2019 December 2018 Quarterly on a quarterly basisYear on year
Sydney3.97%3.91%1.4%2.7%
Melbourne4.58%4.41%3.8%3.3%
Brisbane5.23%5.08%3.0%3.3%
Adelaide5.32%5.20%2.2%3.5%
Perth4.93%4.83%2.0%8.5%
Canberra6.14%6.03%1.9%4.6%
Darwin6.07%6.04%0.5%0.5%
Hobart5.17%4.95%4.3%-0.7%

Data source: domain

Yields are lowest in Sydney and Melbourne, while selling prices fall, leading to more investors looking elsewhere, said Rich Harvey, chief executive of propertybuyer.com.au.

& # 39; You would only consider going to that low yield if you knew there would be strong added value & # 39 ;, Harvey said. & # 39; We see many investors [now] interested in regional areas or Brisbane and many of our investors in the Newcastle market. & # 39;

He warns that investors should not only focus on returns, but also on potential population growth, infrastructure projects and employment opportunities – all of which drive up property prices.

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